Debt Of 26 Poorest Countries At 18-Year High: World Bank
The report highlights that their average debt-to-gross domestic product (GDP) ratio is at an 18-year high at 72 per cent
Even after the rest of the world has largely recovered from the Covid pandemic in terms of growth, the world’s 26 poorest countries have been struggling and their debt has reached an 18-year high, according to a World Bank report.
Reuters reported that these 26 countries, which are home yo 40 per cent of the most poverty-stricken people, are in their worst financial shape since 2006.
As per the report, these countries are poorer today compared to their state on the eve of the Covid-19 pandemic. The report has been released before the annual meetings of the World Bank and International Monetary Fund in (IMF) Washington. As per Reuters, the status of these 26 countries comes as a major setback to the efforts to eradicate extreme poverty.
As these 26 poorest economies show extreme reliance on grants from the International Development Association (IDA) and near-zero interest rate loans, the findings of this report have underscored the efforts of the World Bank this year to raise USD 100 billion to replenish its financing fund for these countries, the IDA.
These countries have annual per-capita incomes of less than USD 1,145. The report highlighted that their average debt-to-gross domestic product (GDP) ratio is at an 18-year high at 72 per cent. Half of the countries are either in debt distress or at high risk of it.
The report pointed out a trend that most of these countries are either engaged in armed conflicts or have been struggling to maintain order due to institutional and social fragility. This inhibits foreign investment and export commodities, which exposes them to regular intervals of boom-and-bust cycles. Most of these countries are in Sub-Saharan Africa, from Ethiopia to Chad. However, the list consists of countries like Afghanistan and Yemen.
